The Singaporean crypto lender Hodlnaut is mulling liquidation following creditors’ stance to dismiss the proposed restructuring of assets. The new development follows the revelation that Hodlnaut suffered $190 million exposure to collapsed Terra.
The crypto lender’s expressed their opposition to restructuring plans overseen by the current directors. In particular, the creditors are expressing reservations about allocating oversight responsibility to current directors in the transition phase.
Restructuring Phase Unviable
Despite the opposition lodged by the creditors, the Singaporean court denied the motion seeking the removal of interim judicial management during the January 12 hearing. In support of their rejection, the creditors submitted that restructuring Holdnaut is unviable. Consequently, they petitioned the crypto lender to pursue wind-down operations instead and liquidate the residual assets.
In filing an objection to the proposed restructure, Algorand Foundation supported immediate liquidation. It decried the delay tactics disguised in the restructuring process to rally other creditors to support asset distribution to optimize the value received.
Holdnaut Financial Challenges
Hodlnaut’s challenges emerged in August 2022 when the crypto lender halted withdrawals. The Singaporean crypto lender admitted battling a liquidity crunch worsened by the volatility witnessed in the broader market.
The creditors submitted that subsequent scrutiny revealed the crypto lender’s dishonesty in downplaying exposure to the Terra ecosystem. An estimated $190 million loss was discovered during the assessment. The agitated creditors questioned the executives’ integrity following the discovery of ordering the deletion of documents in an attempt to conceal the vulnerable investments.
Pursuit of Liquidation
The financial struggles prompted the crypto lender to file a motion for judicial management to avert compulsory liquidations. Eventually, the objection documents submitted by creditors illustrated the court granted protection sought by the crypto lender.
Placing Holdnaut under creditor protection aimed at utilizing the management period to restore the lender’s asset-to-debt ratio. Its accomplishment will restore cryptos’ withdrawal. Nonetheless, the judicial management failed to realize projected success.
Meanwhile, Hodlnaut founders are under active investigation for their alleged role in downplaying exposure to the collapsed Terra ecosystem. The investigators are probing the misrepresentation of facts to the aggrieved investors.
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